Roe v. Empire Blue Cross Blue Shield & St. Joseph's Med. Ctr.

• Decision Date: 01 May 2014
• Docket Number: 12-cv-04788 (NSR)
• Parties: JANE ROE AND JANE DOE, individually and on behalf of all others similarly situated, Plaintiffs, v. EMPIRE BLUE CROSS BLUE SHIELD and ST. JOSEPH'S MEDICAL CENTER, Defendants.
• Court: U.S. District Court — Southern District of New York

JANE ROE AND JANE DOE, individually and on behalf ofall others similarly situated, Plaintiffs, v. EMPIRE BLUE CROSS BLUE SHIELD and ST. JOSEPH'S MEDICAL CENTER, Defendants.

12-cv-04788 (NSR)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Dated: May 1, 2014

OPINION & ORDER

NELSON S. ROMAN, United States District Judge

Jane Roe and Jane Doe ("Plaintiffs"), seeking to proceed as a class, filed this action against Empire Blue Cross Blue Shield ("BCBS") and St. Joseph's Medical Center ("St. Joseph's") (together, "Defendants") pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiffs seek relief for "unlawfully and discriminatorily interfer[ing] with the attainment of benefits" under ERISA Section 510, 29 U.S.C. § 1140, and for breach of fiduciary duty under ERISA Section 404, 29 U.S.C. § 1104. Before the Court is Defendants' motions to dismiss the Complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) and Plaintiffs' cross-motion for a preliminary injunction. For the following reasons, Defendants' motions are granted and Plaintiffs' motion is therefore moot.

I. Facts

Plaintiff Jane Roe has been employed by St. Vincent's Hospital in Westchester, a division of St. Joseph's Medical Center, since September 2007. Following the enactment of the New York Marriage Equality Act, N.Y. DOM. REL. LAW § 10-a (2011), Jane Roe and Jane Doe married.

St. Joseph's sponsors the Direct POS Plan (the "Plan"), a health plan for its employees that is self-insured. The Plan provides benefits for spouses of employees but does not define "spouse" within the Plan. However, the Plan includes an exclusion for same-sex spouses (the "Exclusion"), providing, "Same sex spouses and domestic partners are NOT covered under this plan." (emphasis in original). St. Joseph's Mem. in Supp. Ex. B (the Plan) p. 61. During the open enrollment period for the Plan in December 2011, Jane Roe sought to add Jane Doe as a dependent to her medical benefits coverage. On December 22, 2011, the St. Joseph's Human Resources department verbally informed Jane Roe that the requested coverage for her spouse was denied because the Plan did not cover same-sex spouses. Jane Roe requested the refusal in writing, which she received on February 8, 2012.

Jane Roe sent a Level 1 Grievance letter to both BCBS and St. Joseph's on April 12, 2012, requesting that the denial of coverage be reversed. She did not receive a response. On May 23, 2012, Jane Roe sent a Level 2 Grievance letter to BCBS and St. Joseph's. BCBS responded on May 29, 2012, stating that "under [the Plan], same sex spouse and domestic partner is an EXCLUSION under the benefit." Compl. ¶ 25.

II. Procedural Background

Plaintiffs filed the Complaint on June 19, 2012. The case was assigned to the Honorable Judge Edgardo Ramos. The Court granted Defendants leave to file motions to dismiss on October 2, 2012. On October 18, 2012, Plaintiffs sought leave to file a motion for a preliminary injunction in light of the Second Circuit's decision in Windsor v. United States, 699 F.3d 169 (2d Cir. 2012). The Court decided to hold in abeyance the briefing of Defendants' motions to dismiss and on November 7, 2012, heard oral argument on the issue of the preliminary injunction motion. The Court reserved decision on whether to permit Plaintiffs to file the motion for apreliminary injunction. Judge Ramos did not rule on that issue.

The case was reassigned to the undersigned on July 12, 2013. Plaintiffs renewed their request to file a motion for a preliminary injunction on July 22, 2013 in light of the Supreme Court's decision in United States v. Windsor, 570 U.S. ---, 133 S. Ct. 2675 (2013). On August 15, 2013, this Court granted Defendants leave to file motions to dismiss and Plaintiffs leave to file a cross-motion for preliminary injunction.

In their Complaint, Plaintiffs allege the class to be: "All persons who are participants in or beneficiaries of BCBS insurance plans in the State of New York who were or might be denied medical benefits coverage as a result of an employer's policy that excludes coverage for same-sex spouses." Compl. ¶ 14. Plaintiffs allege a sub-class of "St. Joseph's Plan participants and beneficiaries who have been or will be affected by St. Joseph's policy of excluding coverage for same-sex spouses." Id. at ¶ 15.

III. Motion to Dismiss Legal Standard

On a motion to dismiss under Fed. R. Civ. P. 12(b)(6), dismissal is proper unless the complaint "contain[s] sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When there are well-pleaded factual allegations in the complaint, "a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 679. "Although for the purposes of a motion to dismiss [a court] must take all of the factual allegations in the complaint as true, [it is] 'not bound to accept as true a legal conclusion couched as a factual allegation.'" Id. (quoting Twombly, 550 U.S. at 555). It is not necessary for the complaint to assert "detailed factual allegations," but must allege "more than labels and conclusions." Twombly, 550 U.S at 555. The facts in the complaint "mustbe enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true." Id.

On a motion to dismiss, the court may consider the documents that are "asserted within the four corners of the complaint, the documents attached to the complaint as exhibits, and any documents incorporated in the complaint by reference." McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007). The court may deem a document incorporated by reference where the complaint "refers to" the document. EQT Infrastructure Ltd. v. Smith, 861 F. Supp. 2d 220, 224 n. 2 (S.D.N.Y. 2012). "Specifically in the ERISA context, '[b]ecause the Plan is directly referenced in the complaint and is the basis of this action, the Court may consider the Plan in deciding the motion to dismiss.'" Faber v. Metropolitan Life Ins. Co., No. 08-cv-10588, 2009 WL 3415369, at *1 n.1 (S.D.N.Y. Oct. 23, 2009) (quoting Steger v. Delta Airlines, Inc., 382 F. Supp. 2d 382, 385 (E.D.N.Y. 2005)).

IV. Discussion

a. ERISA Preemption

Plaintiffs argue that the result of the Supreme Court decision U.S. v. Windsor is that ERISA must follow New York State Law - i.e., the Marriage Equality Act - and mandate nondiscriminatory coverage for same-sex couples because of the resulting absence of a Federal law regarding the status of same-sex marriage. The Marriage Equality Act states, "A marriage that is otherwise valid shall be valid regardless of whether the parties to the marriage are of the same or different sex." N.Y. DOM. REL. LAW § 10-a(1) (2011). It further provides,

No government treatment or legal status, effect, right, benefit, privilege, protection or responsibility relating to marriage, whether deriving from statute, administrative or court rule, public policy, common law or any other source of law, shall differ based on the parties to the marriage being or having been of the same sex rather than a different sex. When necessary to implement the rights and responsibilities of spouses under the law, all gender-specific language or terms shall be construed in a gender-neutral manner in all such sources of law.

Id. at § 10-a(2). Defendants argue that New York Law is preempted by ERISA. ERISA's preemption clause states that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA. 29 U.S.C. § 1144(a). "A law 'relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan . . . . Congress used the words 'relate to' in [29 U.S.C. § 1144(a)] in their broad sense." Shaw v. Delta Airlines, 463 U.S. 85, 97-98, 103 S. Ct. 2890, 77 L. Ed. 2d 490 (1983). However, courts "must presume that Congress did not intend to pre-empt areas of traditional state regulation" through ERISA. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 740 (1985). "Issues about marriage and divorce, which may arise under ERISA, are governed by state law and are not subject to the ERISA preemption clause. . . . New York law governs on the question of when parties are lawfully married, which determines the identity of the spouse under both ERISA and the pension plan." Grabois v. Jones, No. 94 CIV.2070(TPG), 1998 WL 158756, at *4 (S.D.N.Y. Apr. 3, 1998); see also Croskey v. Ford Motor Company-UAW, No. 01 CIV. 1094(MBM), 2002 WL 974827, at *4 (S.D.N.Y. May 6, 2002) ("[The] determination [of the lawful widow entitled to survivor benefits from a pension plan] is to be made in accordance with state law because there is no federal domestic relations law, and marriage and divorce are traditional subjects of state regulation."); Bond v. Trustees of STA-ILA Pension Fund, 902 F. Supp. 650, 655 (D. Md. 1995) ("[T]he definition and regulation of marriage is a traditional area of state authority.").

Ultimately, however, whether or not ERISA is preempted for purposes of this action is irrelevant. The question presented by Plaintiffs' Complaint is not whether ERISA or New York State law applies on the issue of marriage, but whether a private plan violates a provision of ERISA by excluding same sex couples from beneficiary status. As Plaintiffs confirm, ERISAgoverns the Plan and thus clearly applies to this case. As the claims are presented, the issue is not whether the Court should look to New York State Law or ERISA but whether Plaintiffs have adequately alleged that Defendants violated ERISA.

b. Claim 1: Claim for Benefits

i. Section 510 Caselaw

Plaintiffs claim that Defendants violated Section 510 of ERISA, entitled "Interference with protected...